New Plays, Monday, 02/11/2008

New Option Plays

by James Brown

New Calls

Monsanto - MON - cls: 114.03 change: +4.11 stop: 107.85

Company Description:
Monsanto Company is a leading global provider of technology-based solutions and
agricultural products that improve farm productivity and food quality. (source:
company press release or website)

Why We Like It:
The agriculture/fertilizer stocks are back on the momentum list. The group is
bouncing sharply and poised to breakout. MON is nearing resistance in the $116
region. We want to catch the bullish breakout so we are suggesting readers buy
calls at $117.05. If triggered we have two targets. Our first target is the
$127.00 level. Our second target is the $137.00-140.00 range. A move over $118
would produce a new triple-top breakout buy signal on the Point & Figure chart.
These have
been very volatile stocks so readers should consider them aggressive,
higher-risk plays. FYI: MON is presenting at the Goldman Sachs 2008 AgForum on
February 12th at 12:40 p.m. Plus, MON is presenting at the Morgan Stanley Basic
Materials Conference 2008 on February 21st.

Note: We are adding multiple plays in the same industry. Don't try to play them
all. Find the one you like best.

Suggested Options:
Our suggested entry point is $117.05. We're suggesting the March calls.

Company Description:
The Mosaic Company is one of the world's leading producers and marketers of
concentrated phosphate and potash crop nutrients. For the global agriculture
industry, Mosaic is a single source of phosphates, potash, nitrogen fertilizers
and feed ingredients. (source: company press release or website)

Why We Like It:
MOS is another fertilizer stock that is seeing a lot of momentum. The stock has
rallied back to resistance near $100 and looks poised to breakout. The early
February high was $100.90. We are suggesting a trigger to buy calls at $101.00.
If triggered we're listing two targets. The first target is $109.75, just under
the January highs. Our second, more aggressive target is the $118.00-120 zone.
These are very volatile stocks with a lot of intraday spikes so we're playing
with a very
wide stop loss. More conservative traders may want to use a tighter
stop in the $94-95-96 zone. We would consider this a more aggressive,
higher-risk play. FYI: MOS is presenting at the Goldman Sachs AgForum on
February 12th at 9:40 a.m. ET.

Note: We are adding multiple plays in the same industry. Don't try to play them
all. Find the one you like best.

Suggested Options:
Our suggested entry point is $101.00. We're suggesting the March calls. Normally
a March $110 call would end in -CB but the CBOE is listing MOS' $110 call as
-CY. Check with your broker.

Company Description:
Potash Corporation of Saskatchewan Inc. is the world's largest fertilizer
enterprise producing the three primary plant nutrients and a leading supplier to
three distinct market categories: agriculture, with the largest capacity in the
world in potash, second largest in nitrogen and third largest in phosphate;
animal nutrition, with the world's largest capacity in phosphate feed
ingredients; and industrial chemicals, as the largest global producer of
industrial nitrogen products and
the world's largest capacity for production of
purified industrial phosphoric acid. (source: company press release or website)

Why We Like It:
POT is the third but certainly not the least of our new bullish plays in the
fertilizer industry. The stock is very volatile and can see some big intraday
moves. On the plus side shares are setting up for another bullish breakout
higher. More aggressive traders might want to jump in now or above $145. We are
suggesting a trigger to buy calls at $147.50, which is above the early February
high. There is relatively clear resistance near $152 but we are betting that POT
is actually on
the verge of an entire leg higher so we're listing a target at
$158.00-160.00. More aggressive traders may want to aim significantly higher.
The Point & Figure chart is forecasting a $222 target. Again, this is a very
volatile stock. Readers should consider it an aggressive, higher-risk trade.
Aggressive traders could put their stop under the 50-dma. We're going to try and
get away with a stop loss under today's low.

Note: We are adding multiple plays in the same industry. Don't try to play them
all. Find the one you like best.

Suggested Options:
Our suggested entry point is at $147.50. We're suggesting the March calls.

New Puts

Avalonbay - AVB - close: 89.06 change: -1.48 stop: 95.05

Company Description:
As of December 31, 2007, the Company owned or held a direct or indirect
ownership interest in 184 apartment communities. AvalonBay is in the business of
developing, redeveloping, acquiring, and managing apartment communities in high
barrier-to-entry markets of the United States. (source: company press release or
website)

Why We Like It:
We have been bearish on the REIT stocks for days now so we're adding another one
to our put candidates list. AVB just broke down under support near $90.00 today
and the MACD indicator has just produced a new sell signal. The P&F chart is
bearish with an $80 target. AVB found support near $80 in January so we're going
to target a decline into the $81.50-80.00 zone. We are playing with a slightly
wider stop loss at $95.05. More conservative traders could try a stop in the
$93-94
zone but remember these have been very volatile stocks with a lot of
intraday spikes. Another risk with AVB is the above average short interest. The
most recent data puts short interest at 12% of the 70 million-share float.
Depending on which figure you use for "average" volume this equates to about 6.5
to 9.0 days of short interest and raises the risk of a short squeeze.